DIPLOMA IN MANAGEMENT (DIM) DIPLOMA IN MANAGEMENT (DIM) DIM-4 Marketing and Retail Management ......

DIPLOMA IN MANAGEMENT

(DIM)

DIM-4

Marketing and Retail Management

Block

Unit – 1

Introduction to Marketing

Unit – 2

Core Concepts of Marketing

Unit – 3

Marketing Environment

Expert Committee

Course Writer Course Editor

Dr. Sushanta Kumar Moharana Dr. Kishore C. Padhi

Consultant (Academic), Former Principal

School of Business Management, SBI Staff Training institute

Odisha State Open University Sambalpur, Odisha

Material Production

Dr. Jayanta Kar Sharma

Registrar

Odisha State Open University, Sambalpur

© OSOU, 2017. Promoting Use and Contribution of Open Education Resources is

made available under a Creative Commons Attribution-ShareAlike 4.0

http://creativecommons.org/licences/by-sa/4.0

Printers by : Sri Mandir Publication, Sahid Nagar, Bhubaneswar

Dr. Suresh Ch. Dash

Dept. of Commerce UN College

Science and Technology,

Adashpur Cuttack - Member

Dr. Ratidev Samal

Asst. Professor

Regional College of Management,

Bhubaneswar – Member

Prof.Dr. Biswajeet Pattanayak

Director,

Asian School of Business Management,

BBSR – Chairperson

Dr. Sudhendhu Mishra

Dept. of Turism and Hospital

Management , BJB (Auto) College,

BBSR–Members

Dr. Sushanta Moharana

Consultant (Academic) ,

School of Business Management, Odisha

State Open University – Convener

Unit – 1

Introduction to Marketing

Learning Objectives: After completion of the unit you should be able to:

Explain the meaning and concept of marketing.

Understand the evolution of marketing.

Describe the significance / importance of marketing.

Familiarize with various approaches to marketing.

Differentiate between ‗marketing‘ and ‗selling‘.

Structure

1.1 Introduction

1.2 Definitions

1.3 Evolution of Marketing Concept

1.4 Concepts and Significance of Marketing

1.5 Approaches to the study of Marketing

1.6 Relationship with other Sciences

1.7 Distinction between Marketing and Selling

1.8 Let‘s Sum-up

1.9 Key Terms

1.10 Self-Assessment questions

1.11 Further Readings

1.12 Model Questions

Odisha State Open University Page 1

1.1 Introduction

First of all we welcome you to the course of marketing. Marketing is a

pervasive phenomenon in the present-day world. Every day, we are

exposed to marketing of goods, services and ideas. This section is

designed to help you get acquainted with different concepts of marketing

and how practically marketing takes place as an exchange process. This

will help to understand marketing in an easier way and understanding the

surrounding as well. The term market is derived from the Latin word

‗MARCATUS‘ which means merchandise, traffic, trade or a place where

business is conducted. The common use meaning of market is a place

where goods are bought & sold. In its strict meaning market need not

necessarily means a place of exchange . Ex- In case of money market

there we don‘t have a place of meeting. So in case of marketing the

mental co-ordination of both parties is required instead of face to face

meeting.Marketing is essentially the process of communicating regarding

the value of a product or service to the customers, for selling that product

or service. Therefore, marketing is understood as an organizational

function with a set of processes for creating, delivering and

communicating this value to its customers, and includes customer

relationship management that also benefits the organization. Marketing

can be understood from a societal point of view, as the link between a

society‘s material requirements and its economic patterns of response to

those requirements. It satisfies these wants and needs by exchange

processes and by building long term relationships. Marketing is hence a

science of choosing the target markets through thorough market analysis

and market segmentation, as well as understanding the consumer

behavior and providing superior customer value.

1.2 Definitions

The term marketing is defined by various distinguished authors and

scholarsin different manners under different perspectives. Let us discuss

some of the prominent definitions of marketing:

1.2.1 Product oriented

The performance of business activities that direct the flow of goods &

services through producer to consumer or user.

1.2.2 Customer oriented


Marketing is a business process by which products are matched with the

markets & through which the transfer of ownership is affected.

1.2.3 System oriented

It is a total system of interacting business activities designed to plan,

price, promote, and distribute want satisfying products to target markets

to achieve organizational objectives.

1.2.4 Kotler’s Definition

Kotler has defined marketing as a social & managerial process by which

individual & group obtain what they need & want through creating,

offering & exchanging products of value with others.

1.2.5 AMA’s Definition

The American Marketing Association most recently defined Marketing

as ―The activity, set of institutions and processes for creating,

communicating, delivering and exchanging offerings that have value for

customers, clients, partners and society at large.‖

1.3 Evolution of Marketing Concept

Marketing concept has undergone a drastic change over years.

Earlier it was production or later

selling which was key to marketing idea but moving ahead now these

have given way to customer satisfaction rather delight developing a

modern marketing concept. Let‘s review the evolution of earlier

marketing ideas;

1.3.1Exchange Concept

The exchange concept of marketing, as the very name indicates,

holds that the exchange of a product between the seller and the buyer is

the central idea of marketing. While exchange does form a significant

part of marketing, to view marketing as more exchange will result in

missing out the essence of marketing. Marketing is much broader than

exchange. Exchange, at best, covers the distribution aspect and the price

mechanism. The other important aspects of marketing, such as, concern

for the customer, generation of value satisfactions, creative selling and

integrated action for serving customer, are completely overshadowed in

exchange concept.

1.3.2 The Production Concept


It is one of the oldest concepts in business. It holds that consumers will

prefer products that are

widely available and inexpensive. Managers of production- oriented

business concentrate on achieving high production efficiency, low costs,

and mass distribution.

1.3.3 The Product Concept

It proposes that consumers favor products that offer the most quality,

performance, or innovative

features. Managers in these organizations focus on making superior

products and improving them overtime.

1.3.4 The Selling Concept

It holds that consumers and businesses, if left alone, won‘t buy enough of

the organization‘s

product. The organization must therefore undertake an aggressive selling

and promotion effort.

1.3.5The Marketing Concept

It emerged in mid-1950s, instead of a product- centered, make-

and –sell philosophy, business

shifted to a customer- centered, sense-and-respond philosophy. The

marketing concept holds that the key to achieving organizational goals is

being effective than competitors in creating, delivering, and

communicating superior customer value to your chosen target markets.

Theodore Levitt of Harvard drew a perceptive contrast between the

selling and marketing concepts. Selling focuses on the needs of the seller,

marketing on the needs of the buyer. Selling is preoccupied with the

seller‘s need to convert his product into cash, marketing with the idea of

satisfying the needs of the customer by means of the product and the

whole cluster of things associated with creating , delivering, and finally

consuming it. Several scholars have found that companies that embrace

the marketing concept achieve superior performance. This was first

demonstrated by companies practicing a reactive market orientation

understanding and meeting customers‘ expressed needs.

1.3.6 Holistic Marketing Concept

The trends and forces defining the 21st century are leading business firms

to a new set of beliefs


and practices. Today‘s best marketers recognize the need to have a more

complete, cohesive approach that goes beyond traditional applications of

the marketing concept. This concept is based on the development, design,

and implementation of marketing programs, processes and activities that

recognizes their breadth and interdependencies. Holistic marketing

recognizes that ―everything matters‖ in marketing- and that a broad,

integrated perspective is often necessary. Holistic marketing is thus an

approach that attempts to recognize and reconcile the scope and

complexities of marketing activities.

1.4 Concepts andSignificance of Marketing

Any economy, developed or under-developed or developing,

whether pure or cock-tailed, is a market oriented economy. Industry,

today, involves the production of all the essential goods for a profitable

sale rather than for self or borne consumption by the producer and his

immediate households. Since, ‗profit maximization‘ is the watchword of

any prudent producer and discerning distributor, this marketing system,

constitutes the bed-rock foundation for the production. That is,

production and marketing are the two pillars of an efficient economy,

whereas, production and consumption are the two wheels of an economy

which are linked by the powerful belt of marketing. By its very nature, a

market oriented economy is a dynamic economy, characterized by the

steady growth and expansion of markets. In such an economic system, it

is the function of marketing system to transform the benefits of

productive efficiency in terms of higher levels of living via distribution.

If the levels of living are low in any country then that can be directly

attributed to the least developed marketing system. The need for the

market grows out of the division of labour, mass and specialized

production calls for the existence of mass markets in which the entire

output can be put in or pushed out at a reasonable margin of profit. To

reach the far-flung markets of the world, marketing services are

inevitable.

1.5 Approaches to the Study of Marketing

Commodity Approach

The ‗commodity approach‘ refers to the detailed study of the

problems encountered in marketing particular products that may be

consumer, industrial or agricultural-products such as hair-oils,

transistors, pens, paper, ties, clothing, lathe machines, bull-dozers, oil-

engines, generators, wheat, rice, cotton, dairy-products etc. Number of

problems crop up in the movement of goods from the point of production

to the point of consumption. We may take up any type of product and

study how each of them is marketed. This detailed analysis encompasses

the study of classification of products, characteristics of each kind of


product, source of supply, the persons engaged in exchange, its

transportation, financing, storage and advertisement. For every product,

we have to apply this criterion that becomes repetitive. Though there

may be certain differences in marketing, most of the product similarities

out-weigh the differences. By studying the products individually, we get

the full picture of marketing.

Institutional Approach

This approach studies the various marketing institutions particularly

the middlemen or facilitating agencies which perform the marketing

functions. It emphasizes the type of middlemen and agencies involved.

We are to study wholesaling, retailing and various other agent-

middlemen at the distribution level. Under the title of wholesaling, we

are to concentrate on the functions performed and services rendered by

the group of these people, the problems that they face in the flow of

goods. Retailing takes into account the study of nature and significance

of retailing in terms of functions and services performed and rendered

by retail institutions like departmental stores, multiple shops,

supermarkets, mail-order houses, co-operatives, etc. In case of agent

middlemen, we are to dig in about their functions and services, as they

are essential adjuncts in the machinery of marketing. It is more or less a

study of all those institutions that are instrumental in moving the wheels

of marketing. It will cover institutions like, regulated markets, stock

exchanges, commodity exchanges, banking and other organisations,

including governmental institutions that provide legal base for marketing

activities.

Functional Approach

The ‗functional approach‘ refers to the classification and study of

specialized activities which are performed in doing marketing work i.e.,

functions of marketing system. It analyses each function, in relation to

the importance of its performance. The different marketing functions are,

selling, buying, transportation, ware-housing, financing, risk taking and

market-intelligence. All these functsons are to be studied separately in

order to understand their importance. To illustrate, we may study the

selling function in relation to marketing of a particular product like a

lathe-machine or rice or a T.V. Set etc., and as to how each of the

different institutions, engaged in marketing of these products, perform

the activities; that is the function of retailers, wholesalers, manufacturers

etc. By careful investigation of how each of the functions of marketing

are performed and what problems they face and how much they cost, we

are able to obtain an understanding of marketing.

1.6Relationship with other Sciences


The marketing manager faces many difficulties because of the

necessity of integrating the several variables of the marketing mix.

Marketing management comes across again further challenges. The

marketing manager should also be able to use to the benefit of the

concern the concepts and ideas, given by the economics, psychology,

sociology, anthropology, mathematics and statistics. He can better use

these subject experts in his job of marketing management as he is not a

specialist in all these fields. These sciences have given the management

methods like projective techniques, mathematical models and

programming, statistical sampling and measurement. These all

behavioural sciences give to the marketing manager many clues for his

programming and activity. Products are purchased due to habit, impulse,

social pressure, prestige. Like a psychologist, the marketing manager is

also interested in personality, attitudes and motives of human beings.

Hence, the marketing manager should be in a position to use, where

relevant, the ideas advanced by other sciences.

1.7Distinction between Marketing and SellingDownload

Answers

The best way to distinguish between these two concepts is to say that the

marketing concept is more oriented towards helping the customer

whereas the selling concept is more oriented towards helping the seller.

In the selling concept (which was a more popular concept a few

decades ago), the idea was to take a product that already existed and

figure out how best to sell it. This meant that the firm's only real goal

was to persuade customers to buy whether the product really fit their

needs or not.

In the marketing concept, this is reversed. The firm tries to find

out what customers wants and then goes out and attempts to provide a

product that will fill the need. This is, as you can see, much more

beneficial to the The marketing concept asserts that businesses are

required to focus on the consumers' needs and wants so they can offer

products or services that will satisfy these needs better than the

competition. The marketing concept brings to the fore the principle of

competitive advantage and superior offerings. This concept was

developed because with time, consumers grew to be more discerning and

selective about their purchase decisions. In this regard businesses

invested in strategies that would provide them with information about

what the consumer needs prior to product development.


The selling concept, on the other hand, asserts that consumers need to be

influenced in order to buy the products on offer through promotional

campaigns. The focus of this concept is directed towards turning

products into cash for the business.

Overall the differences between the two are;

The selling concept focuses on the needs of the seller while the

marketing concept focuses on the needs of the buyer

The selling concept works to turn products into cash while the marketing

concept works to satisfy the customers' needs through the product

In the selling concept, competition is predominantly centered on sales

while in the marketing concept the competition is centered on consumer

satisfaction

Selling concept is used when a company wants to get rid of its inventory,

irrespective of customer needs. To achieve this, the company will use

aggressive marketing, discounts, strong publicity, etc. A good example is

insurance. The emphasis is on getting the sale volumes, rather than

building long term customer relationships. The company generates

profits by selling the commodity and the price is determined by the cost

incurred by the company. Generally, the company will use existing

technology and services and sell them by aggressive marketing. This

approach is a short term method to achieve targets.

Marketing concept, on the other hand, relies on customer needs and

emphasizes customer satisfaction, thereby hoping to build long-term

relations. Here, the product is manufactured as per the needs of the

customer and the company tries to be as innovative as possible (to stay

ahead of competition). The customer decides the price (how much money

is the customer planning to obtain this product or service?, etc.) and this

price will determine the cost of the product. This long-term strategy

relies on innovation. All the departments of the company work in

conjunction to bring out a product that will, hopefully, satisfy the

customer, unlike selling concept, where departments work in isolation.

The marketing and selling concepts are usually perceived as being the

same, but there are some important differences between the two of them.


The first major difference is given by the fact that the selling concept is

focused on the product, while the marketing concept is focused on

consumers needs.

While the selling concept is focused on the sales volume, the marketing

concept targets the profits.

The selling concept accentuates sellers needs, while the marketing

concept emphasizes buyers needs.

In the selling concept, the price is determined by the cost, while in the

established by the consumers.

The selling concept uses the existing technology and it aims the reducing

of costs, while the marketing concept adopts the new technologies and

the cost is established accordingly.

MARKETING SELLING

1.8 Let’s Sum-up

Marketing has deeply impacted the standard of living of human

being. It concepts and applications should properly understood by human

being for a better experience.The term market is derived from the Latin

word ‗MARCATUS‘ which means merchandise, traffic, trade or a place

where business is conducted. The common use meaning of market is a

place where goods are bought & sold.A market may be considered as a

convenient meeting place where buyer & seller gather together for

exchange of goods.Marketing is a business process which matches the


product according to the market demand to achieve organizational

objective.

Kotler has defined marketing as a social & managerial process by which

individual & group obtain what they need & want through creating,

offering & exchanging products of value with others.

1.9 Key Terms

Market,

Marketing,

Buying,

Selling,

Exchange Process

1.10 Self-Assessment Questions

1. Define marketing and discuss in brief the various concepts of

marketing.

Ans:

2. Distinguish between marketing and selling in your own words.

Ans.



2 Philip Kotler- Marketing Management, Printice –Hall of India.,

New Delhi.

3 Ramaswamy and Namakumari- Marketing management,

MacmillanPublishers India Ltd., New Delhi.

4 RajanSaxena- Marketing Management, Tata Mc-Graw Hill

Education Pvt Ltd., New Delhi.

5 K. Karunakaran- Marketing Management, Himalaya Publishing

House., Mumbai.


1. Describe the evolution of marketing concept.

2. Explain the different approaches to the study of marketing in

your own words.


Unit-2

Core Concepts of Marketing

Learning Objectives

After you work out thislesson, you should be able to:

List out the various core concepts of marketing

Understand how all these core concepts are interconnected

Explain how marketing is changing in a connected world

Structure

2.1 Introduction

2.2 Needs, Wants and Demands

2.3 Products

2.4 Value and satisfaction

2.5 Exchange, Transactions and Relationships

2.6 Markets

2.7 Marketing in a connected World

2.8 Let‘s Sum-up

2.9 Key Terms




2.1 Introduction

Having defined marketing in the previous unit from different

perspectives and also as a social and managerial process by which

individuals and groups obtain what they need and want through creating

and exchanging products and value with others, this lesson examines the

important concepts that are included andimplied in this definition. It is

important to note that they are linked, with each one building on the one

before it.Marketing Management is a social and managerial process by

which individuals or firms obtain what they need or want through

creating, offering, exchanging products of value with each others.


2.2 Needs, Wants and Demands

The most basic concept underlying marketing is that of

humanneeds. A need is a state of felt deprivation. It is a part of the

humanmakeup. Humans have many needs, viz., physical needs, social

needs,spiritual needs and so on. Wants are the form taken by needs as

they areshaped by the one‘s culture and personality. Wants are thus

shaped byboth the internal and external factors. Wants are described in

terms ofobjects that will satisfy needs. For example, thirst is a need. To

quenchthis thirst, a person may consider a number of options (want-list)–

drinkwater or a soft drink or a fruit juice. These objects (which

representthe different choices for a person to fulfill his/her need)

comprise thepotential want-list. As people are exposed to more objects

that arouse

their interest and desire, marketers try to provide more choices, that

is,more want-satisfying products. People have almost unlimited wants

butlimited resources. Therefore, they want to choose products that

providethe most satisfaction for their money. When backed by buying

power(ability), a want becomes a demand.

EXAMPLES OF NEED/ WANT/ DEMAND: Need: It is state of deprivation of some basic satisfaction. eg.- food,

clothing, safety, shelter.

Want: Desire for specific satisfier of need. eg.- Indians needs food – wants

paneer tikka/ tandoori chicken.

Americans needs food- wants hamburger/ French fries.

Demand: Want for a specific product backed up by ability and willingness

to buy. eg.- Need – transportation. Want – car (say, Mercedes)……but able

to buy only maruti.

Therefore, demand is for maruti.

Marketers cannot create needs. Needs pre-exists. Marketers can influence

wants. This is done in combination with societal influencers.

Demand influenced by making product- APPROPRIATE, ATTRACTIVE,

APPROACHABLE, AFFORDABLE and AVAILABLE EASILY.

To target consumers ( 4 P‘s)- Product/ Promotion/ Price/ Place


2.3 Products

A product is anything that can be offered to a market to satisfy a need or

want. People satisfy their needs and wants with products. Though the

word suggests a physical object, the concept of product is not limited to

physical objects. Marketers often use the expressions goods and services

to distinguish between physical products and intangible ones. These

goods and services can represent cars, groceries, computers, places,

persons and even ideas.

Customers decide which entertainers to watch on television,

which places to visit for a holiday, which ideas to adopt for their

problems and so on. Thus the term ‗product‘ covers physical goods,

services and a variety of other vehicles that can satisfy customers‘ needs

and wants. If at times the term ‗product‘ does not seem to be appropriate,

other terms such as market offering, satisfier are used.

EXAMPLES OF PRODUCTS- GOODS/ SERVICES/ PLACE:

Product is anything that can satisfy need/ want.

Product component-

1. Physical Good.

2. Service.

3. Idea.

eg. Fast food- burger/ pizza.

Physical Good - material eaten.

Service – purchase of raw material/ cooking

Idea – speed of computer/ processing power.

Importance of product lies in - Owning them (minor)

- Obtaining them (major).

Hence, products are really a via- media for services.

Hence, in marketing, focus is on providing/ satisfying service rather than

providing products.

Marketing Myopia: Focus on products rather than on customer needs.

2.4 Value and Satisfaction

When the customers have so many choices to choose from to

satisfy a particular need, how do they choose from among these many


products? They make their buying choices based on their perceptions of a

product‘s value. The guiding concept is customer value. A customer

will estimate the capacity of each product to satisfy his need. He/She

might rank the products from the most need-satisfying to the least need-

satisfying. Of course, the ideal product is the one which gives all the

benefits at zero cost, but no such product exists. Still, the customer will

value each existing product according to how close it comes to his/her

ideal product and end up choosing the product that gives the most benefit

for the rupee – the greatest value.

Tools for tracking and measuring Customer Satisfaction: Complaint and Suggestion systems, Customer satisfaction surveys, Ghost shopping, Lost customer Analysis.

EXAMPLES OF VALUE/ COST/ SATISFACTION:

Decision for purchase made based on value/ cost satisfaction

delivered by product/ offering. Product fulfills/ satisfies Need/ Want.

Value is products capacity to satisfy needs/ wants as per consumer‘s

perception or estimation. Each product would have a cost/ price elements

attached to it.

Eg. - Travel from city A to city B.

Need – to reach B ( from A)

Method/ Products- Rail/ air/ road or train/ plane.

Satisfaction – Estimated in terms of time lead & travel comfort.

VALUE- Products capacity to satisfy.

COST- Price of each products.

2.5 Exchange, Transactions and Relationships

Marketing occurs when people decide to satisfy needs and wants

through exchange. Exchange is the act of obtaining a desired object from

someone by offering something in return. Thought it is only one of the

many ways people can obtain a desired object, it allows a society to

produce much more than it would with any alternative system. For an


exchange to take place, several conditions must be satisfied. Of course, at

least two parties must participate, and each must have something of value

to the other. Each party also must want to deal with the other party and

each must be free to accept or reject the other‘s offer. Finally, each party

must be able to communicate and deliver. These conditions simply make

exchange possible. Whether the exchange actually takes place depends

on the parties‘ coming to an agreement. If they agree, we must conclude

that the act of exchange has left both of them better off or at least not

worse off. After all, each was free to reject or accept the offer. In this

sense, exchange creates value just as production creates value. It gives

customers more consumption possibilities.

A transaction is marketing‘s unit of measurement. It consists of a

trade of values between two parties. A monetary transaction involves

trading goods and services in return for money whereas a barter

transaction involves trading goods and services for other goods and

services. Transaction marketing is part of the larger idea of relationship

marketing. Marketing is shifting from trying to maximize the profit on

each individual transaction to maximizing mutually beneficial

relationships with consumers and other parties. This is based on the

assumption that if good relationships are built, profitable transactions

will simply follow.

EXAMPLES OF EXCHANGE/ TRANSACTION:

To satisfy need/ want, people may obtain the product through

- Self Production

- By force or coercion

- Begging

- Exchange

EXCHANGE: - The act/ process of obtaining a desired product from

someone by offering

something in return. For exchange potential to exist, the following

conditions must be

fulfilled.

a) There must be at least two parties.

b) Each party has something of value for other party.

c) Each party is capable of communication & delivery

d) Each party is free to accept/ reject the exchange offer.

e) Each party believes it is appropriate to deal with the other party.

TRANSACTION: - Event that happens at the end of an exchange.

Exchange is a process

towards an agreement. When agreement is reached, we say a transaction

has taken place.


a) Barter transaction.

b) Monetary Transaction.

1) At least two things of value.

2) Condition agreed upon.

3) Time of agreement.

4) Place of agreement.

5) May have legal system for compliance.

Proof of transaction is BILL/ INVOICE.

TRANSFER: - It is one way. Hence, differ from Transaction.

NEGOTIATION: - Process of trying to arrive at mutually agreeable

terms.

Negotiation may lead to – Transaction

- Decision not to Transaction

EXAMPLES OF RELATIONSHIPS/ NETWORKING:

Relationship marketing:- It‘s a pattern of building long term satisfying

relationship with

customers, suppliers, distributors in order to retain their long term

performances and

business.

Achieved through promise and delivery of

- high quality

- good service

- fair pricing, over a period of time.

Outcome of Relationship Marketing is a MARKETING NETWORK.

MARKETING NETWORK: It is made up of the company and its

customers, employees,

suppliers, distributors, advertisement agencies, retailers, research &

development with whom

it has built mutually profitable business relationship.

Competition is between whole network for market share and NOT

between companies alone.

2.6 Markets

The concept of transactions leads to the concept of a market. A

market is the set of actual and potential buyers of a product. It may exist

in a physical environment as a marketplace or in a virtual environment

(on the internet platform) as a market space. To understand the nature of

a market, imagine a primitive economy consisting of only four people – a

farmer, a fisherman, a potter and a hunter. The following Figure shows

the different ways in which these traders could meet their needs. In the

first case, self-sufficiency, they gather the needed goods for themselves.

In the second case, decentralized exchange, each person sees the other

three as potential buyers who make up a market. In the third case,


centralized exchange, a new person called a merchant appears and

locates in a central area called a marketplace. Each trader brings goods to

the merchant and trades for other needed goods. Merchants and central

marketplaces greatly reduce the total number of transactions needs to

accomplish a given volume of exchange. As economies grow, exchange

becomes even more centralized, as seen in the growth of huge

companies. Large supermarkets now serve millions of people who

formerly shopped in smaller outlets.

2.7Marketing in a connected World

The internet and the resultant connected world has posed some

special challenges and opportunities for marketers.

Prof.MohanbirSawhney (Kellogg School of Management) has used two

interesting metaphors (hunting Vs. gardening) to describe marketing

hither-to and marketing hence-forth.


The underlying reason for this shift is the rise of information democracy

made possible by the internet. For information symmetry (characterized

by scarce information, ill-informed customers, monologue kind-of

exchanges and ‗command-and-control‘ marketing) the society is moving

towards information democracy (characterized by ubiquitous

information, well-informed customers, conversations kind-of exchanges

and ‗connect-and-collaborate‘ marketing). TheCluetrain

Manifesto(www.cluetrain.org) describes markets as conversations in the

followingmanner:

Markets are conversations. Their members communicatein language that

is natural, open, honest, direct, funny and oftenshocking… Most

corporations, on the other hand, only knowhow to talk in the soothing,

humorless monotone of the missionstatement, marketing brochure, and

your-call-is-important-to-usbusy signal. Same old tone, same old lies. No

wonder networkedmarkets have no respect for companies unable or

unwilling tospeak as they do.

In the connected world, the empowered customers can:

(1)Get objective information for multiple suppliers without relying on

themanufacturer or the retailer (e.g., Edmunds.com);


(2) Initiate requests forinformation and advertising from manufacturers

(e.g., DealTime.com);(3) Design and configure customized offerings

(e.g., Dell.com);

(4) Usebuying agents to pit sellers against each other (e.g., Free markets

Online);

(5) Unbundle offerings and arbitrage across channels (e.g. Ritz Camera);

(6) Pay by the minute, by the month, by the mile (e.g., IBM e-business

ondemand) and

(7) Communicate with peers and experts for feedback onproducts and

brands (e.g. Amazon.com and Epinions.com).

2.8 Let’s Sum-up

Marketing Management is a social and managerial process by

which individuals or firms obtain what they need or want through

creating, offering, exchanging products of value with each others.Need is

state of deprivation of some basic satisfaction. Want refers to the desire for

specific satisfier of need. Demand is the want for a specific product backed

up by ability and willingness to buy any product or service.A product is

anything that can be offered to a market to satisfy a need or want.They

make their buying choices based on their perceptions of a product‘s

value. The guiding concept is customer value.Marketing occurs when

people decide to satisfy needs and wants through exchange. Exchange is

the act of obtaining a desired object from someone by offering something

in return.A transaction is marketing‘s unit of measurement.Relationship

is a pattern of building long term satisfying relationship withcustomers,

suppliers, distributors in order to retain their long term performances

andbusiness.A market is the set of actual and potential buyers of a

product. It may exist in a physical environment as a marketplace or in a

virtual environment (on the internet platform) as a market space.The

internet and the resultant connected world have posed some special

challenges and opportunities for marketers

2.9 Key Terms

Needs, Wants and Demands

Products

Value and satisfaction

Exchange, Transactions and Relationships

Markets



1. Define marketing and discuss in brief the various concepts of

marketing.

Ans:

2. Explain the core concept of marketing in relation to exchange,

transaction and relationships.

Ans:


1. Philip Kotler- Marketing Management, Printice –Hall of

India., New Delhi.

2. Ramaswamy and Namakumari- Marketing management,


3. RajanSaxena- Marketing Management, Tata Mc-Graw Hill


4. K. Karunakaran- Marketing Management, Himalaya

Publishing House., Mumbai.



1. Explain how more emphasis on the concept of

product leads to ‗marketing myopia‘?

2. With regard to the emerging concept, state how

marketing is done in a connected world?

3. Write short notes on:

(a.) Needs, wants and demand

(b.) Value and satisfaction

Unit – 3

Marketing Environment

Learning Objectives: After completion of the unit you should be able to:

Explain the meaning and concept of marketing environment.

Draw a line of distinction between micro and macro environment.

Describe the significance of scanning the environment.

Structure

3.1 Introduction

3.2 Scanning the Environment

3.3 Concept of Micro and Macro Environment

3.4 Micro Environment

3.4.1 The Company

3.4.2 Company‘s Suppliers

3.4.3 Marketing Intermediaries

3.4.4 Physical Distribution

3.4.5 Customers


3.4.6 Competitors

3.4.7 Public

3.5 Macro Environment

3.5.1 Demographic Environment

3.5.2 Economic Environment

3.5.3 Physical Environment

3.5.4 Technological Environment

3.5.5 Political Environment

3.5.6 Legal Environment

3.5.7 Social and Cultural Environment

3.6 Let‘s Sum-up

3.7 Key Terms




3.1 Introduction

Marketing activities are influenced by several factors inside and

outside a business firm. These factors or forces influencing marketing

decision-making are collectively called marketing environment. It

comprises all those forces which have an impact on market and

marketing efforts of the enterprise. According to Philip Kotler, marketing

environment refers to ―external factors and forces that affect the

company‘s ability to develop and maintain successful transactions and

relationships with its target customers‖.

The marketing programme of a firm is influenced and shaped by a

firm‘s inwardly need to begin its business planning by looking outwardly

at what its customers require, rather than inwardly at what it would prefer

to produce. The firm must be aware of what is going on in its marketing

environment and appreciate how change in its environment can lead to

changing patterns of demand for its products.It also needs to assess

marketing opportunities and threats present in the surroundings. An

environment can be defined as everything which surrounds and impinges

on a system. Systems of many kinds have environments with which they

interact. Marketing can be seen as a system which must respond to

environmental change. Just as the human body may have problems, it


fails to adjust to environmental change. Similarly, businesses may fail if

they do not adapt to external changes such as new sources of competition

or changes in consumers‘ preferences.

3.2 Scanning the Environment

The marketing environment offers both opportunities and threats.

Successful companies know the vital importance of constantly watching

and adapting to the changing environment. A company‘s marketers take

the major responsibility for identifying significant changes in the

environment. More than any other groups in the company, marketers

must be the trend trackers and opportunity seekers. Although every

manager in an organisation needs to observe the outside environment,

marketers have two special aptitudes. They have disciplined methods –

marketing intelligence and marketing research – for collection of

information about the marketing environment. They also spend time in

the customer and competitor environment. By conducting systematic

environmental scanning, marketers are able to revise and adapt

marketing strategies to meet new challenges and opportunities in the

market place.

The following are the benefits of environment analysis that help

marketing analysis.

It can assess the impact of opportunities and threats on the

business.

It facilitates the company to increase general awareness of

environmental changes.

It is possible to develop effective marketing strategies on the

basis of analysis.

It helps to capitalize the opportunities rather than losing out to

competitors.

It facilitates to understand the elements of the environment.

It helps to develop best strategies, in the light of analysing

―what is going around the company‖.

3.3 Concept of Micro and Macro environment

A marketing oriented company looks outside its premises to take

advantage of the emerging opportunities, and to monitor and minimize

the potential threats face by it in its businesses. The environment consists

of various forces that affect the company‘s ability to deliver products and


services to its customers. Therefore, the marketing environment is made

up of two types. They are: Micro-environment and Macro environment.

3.4 Micro Environment

The micro-environment of the company consists of various forces

in its immediate environment that affect its ability to operate effectively

in its chosen markets. This includes the following.

The company

Company‘s supplier

Marketing intermediaries

Customers

Competitors

Public

3.4.1 The company

In designing marketing plans, marketing management takes other

company groups into account – Finance, Research and Development,

Purchasing, Manufacturing, Accounting, Top Management etc.

Marketing manager must also work closely with other company

departments. Finance in concerned with funds and using funds to carry

out the marketing plans.

The R&D Department focuses on designing safe and attractive

product. Purchasing Department is concerned with supplies of materials

whereas manufacturing is responsible for producing the desired quality

and quantity of products. Accounts department has to measure revenues

and costs to help marketing know-how. Together, all of these

departments have impact on the marketing plans and action.

The internal environment (Within the company)

The marketing management, in formulating plans, take other

group of the company into account. They are:

Top Management

Finance

R&D

Manufacturing

Purchasing

Sales Promotion

Advertisement etc.

Environmental forces are dynamic and any change in them brings

uncertainties, threats and opportunities for the marketers. Changes in the

environmental forces can be monitored through environmental scanning,


that is, observation of secondary sources such as business, trade and

Government, and environmental analysis, that is, interpretation of the

information gathered through environmental scanning.

Figure-1: The organization’s Marketing environment

3.4.2 Company’s Suppliers

Suppliers provide the resources needed by the company to

product its goods and services. They are important links in the

company‘s overall customer ―value delivery system‖. Supplier

developments can seriously affect marketing. Marketing managers must

watch supply availability – supply shortages or delays, labour strikes and

other events can cost sales in the short run and damage customer

satisfaction in the long run. Marketing Managers also monitor the price

trends of their key inputs. Rising supply costs may force price increases

that can harm the company‘s sales volume.

In business-to-business marketing, one company‘s supplier is

likely to be another company‘s customer and it is important to

understand how suppliers, manufacturers and intermediaries work

together to create value. Buyers and sellers are increasingly co-operating

in their dealings with each other, rather than bargaining each transaction

in a confrontational manner in order to make supply chain management

most effective and value-added products are sold to the target markets.

3.4.3 Marketing Intermediaries


Intermediaries or distribution channel members often provide a

valuable link between an organisation and its customers. Large-scale

manufacturing firms usually find it difficult to deal with each one of

their final customers individually in the target markets. So they chose

intermediaries to sell their products.

Marketing intermediaries include resellers, physical distribution

firms, marketing service agencies, and financial intermediaries. They

help the company to promote, sell, and distribute its goods to final

buyers. Resellers are distribution channel firms that help the company

to find customers for goods. These include whole-sellers and retailers

who buy and resell merchandise. Selecting and working with resellers

is not easy. These organisations frequently have enough power to

dictate terms or even shut the manufacturer out of large markets.

3.4.4 Physical Distribution

Firms help the company to stock and move goods from their

points of origin to their destinations. Working with warehouse and

transportation firms, a company must determine the best ways to store

and ship goods, and safety marketing services agencies are the marketing

research firms, advertising agencies, media firms, and marketing

consulting firms that help the company target and promote its products to

the right markets.

When the company decides to use one of these agencies, it must

choose carefully because those firms vary in creativity, quality, service

and price. Financial intermediaries include banks, credit companies,

insurance companies, and other businesses that help finance transactions

or insure against the risks associated with the buying and selling of

goods. Most firms and customers depend on financial intermediaries to

finance their transactions.

3.4.5 Customers

Consumer markets consists of individuals and households that

they buy goods and services for personal consumption. Business markets


buy goods and services for further processing or for use in their

production process, whereas reseller markets buy goods and services to

resell at a profit.

Government markets are made up of government agencies that

buy goods and services to produce public services or transfer the goods

and services to others who need them. Finally, international markets

consist of the buyers in other countries, including consumers, producers,

resellers and governments. Each market type has special characteristics

that call for careful study by the seller.

3.4.6 Competitors

No single competitive marketing strategy is best for all companies. The

company‘s marketing system is surrounded and affected by a host of

competitors. Each firm should consider its own size and industry position

compared to those of its competitors. These competitors have to be

identified, monitored to gain and maintain customer loyalty.

Industry and competition constitute a major component of the

micro-environment. Development of marketing plans and strategy is

based on knowledge about competitors‘ activities. Competitive

advantage also depends on understanding the status, strength and

weakness of competitors in the market. Large firms with dominant

positions in an industry can use certain strategies that smaller firms

cannot afford. But being large is not enough. There are winning

strategies for large firms, but there are also losing ones. And small

firms can develop strategies that give them better rate of return than

large firms enjoy.

3.4.7 Public

General public do take interest in the business undertaking. The

company has a duty to satisfy the people at large along with

competitors and the consumers. A public is defined as ―any group that

has an actual or potential interest in or impact on a company‘s ability to

achieve its objectives.

Public relation is certainly a broad marketing operation which

must be fully taken care of Goodwill, favourable reactions, donations

and hidden potential fixture buyers are a few of the responses which a

company expects from the public. Kotler in this regard has viewed that

―companies must put their primary energy into effectively managing

their relationships with their customers, distributors, and the suppliers,

their overall success will be affected by how other publics in the society

view their activity. Companies would be wise to spend time monitoring


all their public‘s understanding their needs and opinions and dealing

with them constructively‖.

Every company is surrounded by seven types of public, as shown

below:

Financial—banks, stock-brokers, financial institutions.

Media—Newspaper, magazines, TV.

Government—Government departments.

Citizen—Consumer Organisations; environment groups.

Local—neighbourhood residents, community groups.

General—General Public, public opinions.

Internal—Workers, officers, Board of Directors.

3.5 Macro environment The macro-environment consists of broader forces that not only

affect the company and the industry, but also other factors in the micro-

environment.

The components of a macro-environment are:

Demographic Environment

Economic Environment

Physical Environment

Technological Environment

Political Environment

Legal Environment

Social and Cultural Environment

The components of a macro-environment are described as follow

3.5.1 Demographic Environment

Demography is the study of population characteristics that are

used to describe consumers. Demographics tell marketers who are the

current and potential customers, where are they, how many are likely to

buy and what the market is selling. Demography is the study of human

populations in terms of size, density, location, age, sex, race, occupation

and other statistics.Marketers are keenly interested in studying the

demography ethnic mix, educational level and standard of living of

different cities, regions and nations because changes in demographic

characteristics have a bearing on the way people live, spend their money

and consume.

For example, one of the demographic characteristic is the size of

family. With the number of small families increasing in India, the

demand for smaller houses and household items has increased

significantly. Similarly, the number of children in a family has reduced

significantly over the years. So, per child spending in a family has

increased significantly.


According to the World Health Organisation, young people in the

age group of 10-24 years comprise 33% of the population and 42% of

our population consists of age group, 0-24 years. Teen-agers in the age

group below 19 years comprise 23%. The senior citizen age group above

65 years comprise only 8% of total population. About 58% of the

working population is engaged in agricultural activities, with highest,

that is 78% in Bihar and Chattisgarh and lowest 22% in Kerala.

Since human population consists of different kinds of people with

different tastes and preferences, they cannot be satisfied with any one of

the products. Moreover, they need to be divided in homogeneous groups

with similar wants and demands. For this we need to understand the

demographic variables which are traditionally used by marketers, to

segment the markets.

3.5.1.1 Income

Income determines purchasing power and status. Higher the

income, higher is the purchasing power. Though education and

occupation shapes one‘s tastes and preferences, income provides the

means to acquire that.

3.5.1.2 Lifestyle

It is the pattern of living expressed through their activities,

interests and opinion. Life-style is affected by other factors of

demography as well. Life-style affects a lot on the purchase decision and

brand preferences.

3.5.1.3 Sex

Gender has always remained a very important factor for

distinction. There are many companies which produce products and

services separately for male and female.

3.5.1.4 Education

Education implies the status. Education also determines the

income and occupation. With increase in education, the information is

wider with the customers and hence their purchase decision process is

also different. So the marketers group people on the basis of education.


3.5.1.5 Social Class

It is defined as the hierarchical division of the society into

relatively distinct and homogeneous groups whose members have similar

attitudes, values and lifestyle.

3.5.1.6 Occupation

This is very strongly associated with income and education. The

type of work one does and the tastes of individuals influence one‘s

values, life-style etc. Media preferences, hobbies and shopping patterns

are also influenced by occupational class.

3.5.1.7 Age

Demographic variables help in distinguishing buyers, that is,

people having homogenous needs according to their specific wants,

preferences and usages. For instance, teenagers usually have similar

needs. Therefore, marketers develop products to target specific age

groups.The youth are being targeted through advertisements and

promotional campaigns, stores are being designed with ‗youthful‘

features, youth events are being sponsored, and even new technology is

developed with their tastes in mind.

The age groups that attract the attention of marketers can be

classified as:

Infant

The population of India is growing at an alarming rate. The rate

of infant deaths has declined considerably due to the advancement in

medicine. Although infants are consumers of products, their parents are

the decision makers. The size of a family is decreasing and the average

income of family is increasing.

School going teens

In this segment, there is a great demand for school uniforms,

bags, shoes, books, stationary, confectioneries, food, albums, bicycles

and other similar products.

Young adults


Marketers target the young adults in the age group 18-30 years

with products like motorbikes, music systems, clothes, sports cars etc.

Two-wheeler manufacturers in India target this segment of people. In the

last five years, various companies like, Bajaj, Hero-Honda, Kinetic, TVS

etc. have introduced a large number of models to attract young adults.

Adults(35-45 Years)

Consumers, in this age group, are more health conscious and look

for stability and financial independence. The industries that are benefited

by them are: Pharmaceuticals, personal products, fitness products, gym

equipment‘s, cars, home appliances, consumer durables, banks, insurance

companies, etc. Marketers push products specifically designed for this

age group.

Senior citizen

This consumer group boosts the demand for health care services,

select skin care products, financial planning etc.

Women

Women constitute nearly 50% of India‘s population. They are

actively taking up professions. This shift in their role has generated a

greater demand for childcare and convenience products that save time in

cooking, cleaning and shopping.Marketers are trying to come up with

products that are easier to handle, less heavy, convenient to use etc. The

change in the role of women is paving the way for a change in the role of

men. Advertisements portray men cleaning, cooking and caring for their

children, which was unthinkable in the past.

3.5.2 Economic Environment

Economic environment is the most significant component of the

marketing environment. It affects the success of a business organisation

as well as its survival. The economic policy of the Government, needless

to say, has a very great impact on business. Some categories of business

are favourably affected by the Government policy, some adversely

affected while some others remain unaffected. The economic system is a

very important determinant of the scope of private business and is

therefore a very important external constraint on business.


The economical environmental forces can be studied under the

following categories:

3.5.2.1 General Economic Conditions:

General Economic Conditions in a country are influenced by

various factors. They are:

Agricultural trends

Industrial output trends

Per capita income trends

Pattern of income distribution

Pattern of savings and expenditures

Price levels

Employment trends

Impact of Government policy

Economic systems.

3.5.2.2 Industrial Conditions

Economic environment of a country is influenced by the

prevalent industrial conditions as well as industrial policies of a country.

A marketer needs to pay attention to the following aspects:

Market growth

Demand patterns of the industry

Its stage in product life cycle.

3.5.2.3 Supply sources for production

Supply sources required for production determines inputs which

are available required for production. They are,

Land

Labour

Capital

Machinery and equipment etc.

Economic environment describes the overall economic situation

in a country and helps in analysis GNP per capita rate of economic

growth, inflation rate, unemployment problems etc.


3.5.3 Physical Environment

The physical environment or natural environment involves the

natural resources that are needed as inputs by marketers or those that are

affected by marketing activities. Environmental concerns have grown

steadily in recent years. Marketers should be aware of trends like

shortages of raw materials, increased pollution, and increased

governmental intervention in natural resources management. Companies

will have to understand their environmental responsibility and commit

themselves to the ‗green movement‘.

Potential shortages of certain raw materials, for examples, oil,

coal, minerals, unstable cost of energy, increased levels of pollution;

changing role of Government in environment protection are a few of the

dangers the world is facing on physical environment forces. Other

aspects of the natural environment which may increasingly affect

marketing include the availability and cost of raw materials, energy and

other resources, particularly if those resources and energy come from

non-renewable sources.

3.5.4 Technological Environment

The technological environment is the most dramatic force now

facing our destiny. Technological discoveries and developments create

opportunities and threats in the market. The marketer should watch the

trends in technology. The biggest impact that the society has been

undergoing in the last few years is the technological advancement,

product changes and its effects on consumers.

Technology has brought innumerable changes in human lives, be

it in the field of science, medicine, entertainment, communication, and

travel or office equipment. Name any field, and one can see changes in

product or efficiency and faster services.

One of the most dramatic forces shaping people‘s lives in

technology. Technology has released such wonders as penicillin, open-

heart surgery and birth control pill. It has released such horrors as the

hydrogen bomb, nerve gas, and the sub-machine gun. very new

technology is a force for ―creative destruction‖. Transistors hurt the

vacuum tube industry, xerography hurt the carbon paper business, autos

hurt the railroads, and television hurt the newspapers.Instead of moving

into the new technologies, many old industries fought or ignored them

and their business declined. Yet it is the essence of market capitalism to

be dynamic and tolerate the creative destructiveness of technology as the

price of progress.


Technology essentially refers to our level of knowledge about

‗how things are done‘. That is understanding this aspect of the marketing

environment is much more than simply being familiar with the latest hi-

tech innovations. Technology affects not only the type of products

available but also the ways in which people organize their lives and the

ways in which goods and services can be marketed.

Computer-aided design (CAD) and computer-aided manufacturer

(CAM) have shortened the time required for new products to reach the

market and increased the variety of products that can be produced cost

effectively. The benefits of CAD/CAM are clearly evident in the car

industry. Mass production is in standardized models. Computer systems

have also contributed substantially to the growth of various forms of

direct marketing such as direct mail, direct response marketing etc.

3.5.5 Political Environment

The political environment consists of factors related to the

management of public affairs and their impact on the business of an

organisation. Political environment has a close relationship with the

economic system and the economic policy. Some Governments specify

certain standards for the products including packaging.Some other

Governments prohibit the marketing of certain products. In most nations,

promotional activities are subject to various types of controls. India is a

democratic country having a stable political system where the

Government plays an active role as a planner, promoter and regulator of

economic activity.

Businessmen, therefore, are conscious of the political

environment that their organisation faces. Most Governmental decisions

related to business are based on political considerations in line with the

political philosophy following by the ruling party at the Centre and the

State level.Substantial number of laws has been enacted to regulate

business and marketing to protect companies from each other, to protect

consumers from unfair trade practices, to protect the larger interests of

society against unbridled business behaviour. Changing Government

agency enforcement and growth of public interest groups also bring in

threats and challenges.

3.5.6 Legal Environment

Marketing decisions are strongly affected by laws pertaining to

competition, price-setting, distribution arrangement, advertising etc. It is

necessary for a marketer to understand the legal environment of the

country and the jurisdiction of its courts.

Below given some Indian business laws that affects business in India.


Indian Contract Act 1872

Factories Act 1948

Minimum Wages Act 1948

Essential Commodities Act 1955

Securities Contracts Regulation Act 1956 (SEBI Act)

The Companies Act 1956

Trade and Merchandise Act 1958

Monopolies and Restrictive Trade Practice Act 1969

The water (Prevention and Control of Pollution) Act 1974

The Air (Prevention and Control of Pollution) Act 1981

Sick Industrial Companies (Special Provisions) Act 1985

Environment Protection Act 1986

Consumer Protection Act 1986

Securities and Exchange Board of India Act 1992

Different Taxation Laws.

3.5.7 Social and Cultural Environment

Socio-cultural forces refer to the attitudes, beliefs, norms, values,

lifestyles of individuals in a society. These forces can change the market

dynamics and marketers can face both opportunities and threats from

them. Some of the important factors and influences operating in the

social environment are the buying and consumption habits of people,

their languages, beliefs and values, customs and traditions, tastes and

preferences, education and all factors that affect the business.

In India, social environment is continuously changing. One of the

most profound social changes in recent years is the large number of

women entering the job market. They have also created or greatly

expended the demand for a wide range of products and services

necessitated by their absence from the home. There is a lot of change in

quality-of-lifestyles and people are willing to have many durable

consumer goods like TV., fridge, washing machines etc. even when they

cannot afford them because of their availability on hire-purchase or

instalment basis.

Culture influences every aspect of marketing. Marketing decisions

are based on recognition of needs and wants of the customer, a function

of customer perceptions. These help in understanding of lifestyles and

behaviour patterns as they have grown in the society‘s culture in which

the individual has been groomed. Thus a person‘s perspective is

generated, groomed and conditioned by culture.


3.6 Let’s Sum-up

Marketing can be seen as a system which must respond to




or changes in consumers‘ preferences.The environment consists of

various forces that affect the company‘s ability to deliver products and

services to its customers. Therefore, the marketing environment is made

up of two types. They are: Micro-environment and Macro environment.

3.7 Key Terms

Marketing intermediaries

Customers

Competitors

Public

Demographic Environment

Economic Environment

Physical Environment

Technological Environment

Political Environment

Legal Environment

Social and Cultural Environment


1. What do you mean by environmental forces and how it affects the

marketing environment of an organization?

Ans:


2. Describe the impact of economic environment on 21st century

organizations.

Ans.


1. Philip Kotler- Marketing Management, Printice –Hall of

India., New Delhi.

2. Ramaswamy and Namakumari- Marketing management,


3. RajanSaxena- Marketing Management, Tata Mc-Graw Hill


4. K. Karunakaran- Marketing Management, Himalaya

Publishing House., Mumbai.


1. Explain the significance of marketing environment in the

changing business world.

2. Highlight how technology is putting a profound impact on

modern marketing.


Answers to Self-Assessment Questions

Unit – 1

Define marketing and discuss the holistic marketing concept.

Marketing has been defined by several eminent experts and professional

bodies at different points of time. For our practical purpose, we define

marketing as follow:

Prof. Philip Kotler has defined marketing as a social & managerial

process by which individual & group obtain what they need & want

through creating, offering & exchanging products of value with others.

The American Marketing Association most recently defined Marketing

as ―The activity, set of institutions and processes for creating,

communicating, delivering and exchanging offerings that have value for

customers, clients, partners and society at large.‖

Today‘s best marketers recognize the need to have a more complete,

cohesive approach that goes beyond traditional applications of the

marketing concept. This concept is based on the development, design,


and implementation of marketing programs, processes and activities that

recognizes their breadth and interdependencies. Holistic marketing

recognizes that ―everything matters‖ in marketing- and that a broad,

integrated perspective is often necessary. Holistic marketing is thus an

approach that attempts to recognize and reconcile the scope and

complexities of marketing activities.

1. Distinguish between marketing and selling in your own words.

The best way to distinguish between these two concepts is to say that the

marketing concept is more oriented towards helping the customer

whereas the selling concept is more oriented towards helping the seller.

In the selling concept (which was a more popular concept a few decades

ago), the idea was to take a product that already existed and figure out

how best to sell it. This meant that the firm's only real goal was to

persuade customers to buy whether the product really fit their needs or

not.

(For detail refer to Distinction between Marketing and Selling.)

Unit – 2

3. Explain the term marketing and discuss in brief the various

concepts of marketing.

Ans.

Marketing is a social & managerial process by which individual & group

obtain what they need & want through creating, offering & exchanging

products of value with others.

Various concepts of marketing may be described under the following

heads:

Needs, Wants and Demands

Products

Value and satisfaction

Exchange, Transactions and Relationships

Markets

Marketing in a connected World

Explain the core concept of marketing in relation to exchange,

transaction and relationships.

Ans.


Marketing occurs when people decide to satisfy needs and wants through

exchange. Exchange is the act of obtaining a desired object from

someone by offering something in return. Though it is only one of the

many ways people can obtain a desired object, it allows a society to

produce much more than it would with any alternative system.

A transaction is marketing‘s unit of measurement. It consists of a trade of

values between two parties. A monetary transaction involves trading

goods and services in return for money whereas a barter transaction

involves trading goods and services for other goods and services.

Marketing is shifting from trying to maximize the profit on each

individual transaction to maximizing mutually beneficial relationships

with consumers and other parties. This is based on the assumption that if

good relationships are built, profitable transactions will simply follow.

Unit – 3

1. Explain the significance of marketing environment in the

changing business world.

According to Philip Kotler, marketing environment refers to ―external

factors and forces that affect the company‘s ability to develop and

maintain successful transactions and relationships with its target

customers‖.

The marketing programme of a firm is influenced and shaped by a firm‘s

inwardly need to begin its business planning by looking outwardly at

what its customers require, rather than inwardly at what it would prefer

to produce. The firm must be aware of what is going on in its marketing

environment and appreciate how change in its environment can lead to

changing patterns of demand for its products. It also needs to assess

marketing opportunities and threats present in the surroundings. An

environment can be defined as everything which surrounds and impinges

on a system. Systems of many kinds have environments with which they

interact. Marketing can be seen as a system which must respond to




or changes in consumers‘ preferences.


2. Highlight how technology is putting a profound impact on

modern marketing.

Technology has brought innumerable changes in human lives, be it in the field

of science, medicine, entertainment, communication, and travel or office

equipment. Name any field, and one can see changes in product or efficiency

and faster services.

The marketer should watch the trends in technology. The biggest impact that

the society has been undergoing in the last few years is the technological

advancement, product changes and its effects on consumers.

DIPLOMA IN MANAGEMENT (DIM) DIPLOMA IN MANAGEMENT (DIM) DIM-4 Marketing and Retail Management ......

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